Potawatomi withholds state payment over Kenosha casino

SUN PRAIRIE — The Forest County Potawatomi has refused to make its annual casino revenue payment to the state as Gov. Scott Walker mulls whether to approve a competing facility, causing what the governor is calling a "significant" impact on the state budget.

A tribal spokesman issued a terse statement Tuesday evening saying the tribe made the move because the state may end up owing the Potawatomi money if Walker approves the Menominee Nation's plans for an off-reservation casino in Kenosha. The Potawatomi runs a lucrative casino in Milwaukee just up Interstate 94 from Kenosha and opposes the new facility, fearing it could suck customers away. The Potawatomi's gambling compact with the state requires Wisconsin to reimburse the tribe for any losses it suffers due to a Kenosha casino. Walker's administration is trying to negotiate a deal with the tribe on how to offset losses.

It's unclear how much money the Potawatomi owes the state. The tribe's compact calls for it to pay the state 6.5 percent of its net win in Milwaukee, but those winnings are confidential and a Walker administration spokesman had no immediate response when pressed for details Tuesday

Walker, a Republican, has until Feb. 19 to make a decision on the Kenosha casino. Democrats have been pressing him to make up his mind before the November elections. In a letter to Democratic legislators Tuesday, Walker said he's moving cautiously because he's concerned about the effect on the state budget.

"Already one of the tribal governments is withholding payments to the State and that is having a significant impact on the status of the State budget," Walker wrote. "Needless to say, we are moving forward with legitimate caution as we cannot risk putting that size of a hole in the current and future State budgets. Therefore, we will take the appropriate time necessary to insure that we appropriately manage the finances of the State of Wisconsin."

Department of Administration Secretary Mike Huebsch wrote in a memo that Walker included with his letter that the Potawatomi compact former Democratic Gov. Jim Doyle reached doesn't lay out how the state should reimburse the tribe for losses due to a Kenosha casino and instead says the two sides must enter into arbitration on a compact amendment establishing a process. The federal government must sign off on any changes.

"Substantial challenges lie ahead with the Potawatomi," Huebsch wrote. "One thing is clear — taking action on the proposed Kenosha casino project prior to following the processes laid out in the Doyle compacts could cost taxpayers hundreds of millions of dollars."

Menominee spokesman Michael H. Beightol said in an email to The Associated Press that the tribe wouldn't comment on one tribe's missed payment. He noted that the Menominee has offered to help cover impacts on the state's payments from other tribes.

The Ho-Chunk Nation, which runs a half-dozen casinos around the state, also opposes the Menominee casino.

The Ho-Chunk's compact also requires the state to offset any losses tied to a Kenosha facility. But Huebsch said in his memo that the Ho-Chunk's deal lays out a clear process that calls for the tribe to reduce its annual state payments to correspond with the Kenosha casino's impact. That means the Ho-Chunk likely would owe the state nothing by the time the Kenosha casino was fully operational. What's more, the state could end up paying the Ho-Chunk, Huebsch noted.